1982 (4) TMI 30 - HC - Income Tax

Summary

Issues Involved:
1. Sale of attached property to satisfy income-tax arrears.
2. Acceptance of payments from a third party (M/s. Malook Chand) towards the petitioner's income-tax dues.
3. Release of attachment on business premises.
4. Sale of directors' shares to satisfy income-tax dues.
5. Validity of lease extension and its revocation.
6. Petitioner's entitlement to relief under Article 226 of the Constitution.

Issue-wise Detailed Analysis:

1. Sale of Attached Property to Satisfy Income-Tax Arrears:
The petitioner sought a writ of mandamus directing the respondents to sell the attached property to satisfy the arrears of income-tax dues. The court acknowledged that the movable and immovable properties of the petitioner were attached in 1972 and 1974 respectively. The court concluded that the TRO should proceed to sell the attached properties within a reasonable time to realize the outstanding liability, emphasizing that the attachment should not continue indefinitely without action.

2. Acceptance of Payments from a Third Party (M/s. Malook Chand) Towards the Petitioner's Income-Tax Dues:
The petitioner disputed the validity of payments made by M/s. Malook Chand towards its income-tax dues. The court noted that payments made by M/s. Malook Chand were without the petitioner's consent and were contested. However, the court directed the TRO to determine the extent of the outstanding liability, taking into account the payments made by M/s. Malook Chand and the relief granted by the Income-tax Appellate Tribunal.

3. Release of Attachment on Business Premises:
The petitioner requested the release of the attachment on its business premises. The court found that the attachment could not be deemed withdrawn as the Revenue had not accepted that the due amount, costs, and expenses had been paid. The certificate had not been canceled, and thus, the attachment remained valid.

4. Sale of Directors' Shares to Satisfy Income-Tax Dues:
The petitioner sought a direction preventing the sale of its directors' shares. The court held that the shares were given as security and were not attached by the Department for the realization of the disputed liabilities. Therefore, the shares could not be sold, and the petitioner was not entitled to any relief regarding the shares in this petition.

5. Validity of Lease Extension and Its Revocation:
The petitioner challenged the extension of the lease granted to M/s. Malook Chand without its consent and sought its revocation. The court noted that the original lease was for eight months, and any extension required the petitioner's consent. The TRO initially approved the extension but later revoked it upon the petitioner's application. The court did not delve into the disputed facts regarding the lease extension's validity but noted that the TRO's revocation was valid.

6. Petitioner's Entitlement to Relief Under Article 226 of the Constitution:
The court emphasized that Article 226 is not meant to circumvent private contracts and agreements, and relief under this article is discretionary. The petitioner had suppressed material facts and had not come with clean hands. Despite these defects, the court decided not to dismiss the petition outright. The court granted partial relief by directing the TRO to proceed with the sale of the attached properties to realize the outstanding liabilities within three months, considering the payments made by M/s. Malook Chand and the relief granted by the Income-tax Appellate Tribunal.

Conclusion:
The writ petition was allowed in part. The TRO was directed to determine the outstanding liability, considering all relevant payments and reliefs, and proceed to sell the attached properties within three months. The court made no order as to costs.